eCircular

Department: FINANCIAL REPORTING AND TAXATION

Sl.No.: 464/2020 - 21
Circular No.: CFO/FRT-TAX/6/2020 - 21
Date: Wed 29 Jul 2020

All the Branches/LHOs/SBUs/Offices/ CC establishments of 29.07.2020

State Bank of India CC/FINANCE/FRT/TDS/DK/78

Dear Sir/Madam,

CASH WITHDRAWALS EXCEEDING Rs. 1 CRORE

TAX DEDUCTION AT SOURCE UNDER SECTION 194N
CHANGES EFFECTIVE FROM 01-07-2020 - TDS ON CASH WITHDRAWALS EXCEEDING
₹ 20 LACS

Please refer to our Letter No.CC/CFO/FRT/TDS/DK/60 dated 25.06.2020 and e-circular no.
CFO/FRT-TAX/3/2020-21 dated 02.06.2020 and broadcast emails sent to all the employees
from 30/06/2020 to 04/07/2020 on the captioned subject.

2. The Bank has to deduct tax on cash withdrawals made by any person (herein referred to as
the recipient) from one or more accounts maintained by the recipient through all channels during
a Financial Year, as per threshold mentioned below (w.e.f. 01.07.2020).

Particulars Rate of TDS

Cumulative Cash ITR filed by ITR not filed PAN not
Withdrawals in the current Customer & by Customer & available
Financial Year PAN available PAN available
Up to ₹ 20 Lacs NIL NIL NIL
From ₹ 20,00,001 to ₹. 1 NIL 2% 20%
Crore
More than ₹ 1 Crore 2% 5% 20%

However, tax deduction on cash withdrawals is not applicable to few entities exempted vide our
Circular no. CFO/FRT-TAX/8/2019-20 dated 15.11.2019.

3. In this regard, as you are aware that the system for auto deduction of tax in excess of one
crore is made live from 01.04.2020, but the changes that are effective from 01.07.2020 are
under development and it will take some time for auto deduction of tax through system.

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Therefore, in the interim period branches are advised to recover tax manually from the
customers while withdrawing cash, if they have not filed Income Tax return for all the last 3
years. However, for customers who filed Income Tax Return in any one of last 3 years, Tax will
continue to be deducted by CBS system automatically. The detailed process flow for calculation
and recovery of TDS by the branches is attached as Annexure – A and B.

4. Income Tax Department has come out with a utility to determine the IT Return filing status
and applicable TDS rate u/s 194N, simply by providing PAN Number of the customer. You can
access this utility through www.incometaxindiaefiling.gov.in. A step by step process flow along
with the screen shots is attached as Annexure – C.

5. Till the time system developments are in place, branches are advised to follow the action
points as detailed hereunder:

For all cumulative cash withdrawals above 20 lacs in a financial year:

Branch has to verify the IT Return filing status of the customer using the above utility.

(i) If customer has filed IT Return, the utility will display the following message:
“TDS is deductible @2% if cash withdrawal exceeds Rs.1 Crore.”
a) Record the details of the transaction in the Register to be maintained at the Branch
(Specimen copy attached as Annexure -D)
b) Update the PAN in CBS (if it is not already updated)
c) No need to deduct TDS. CBS will automatically recover TDS @2% if withdrawal exceeds
₹ 1 Crore.

(ii) If customer has not filed IT Return, the utility will display the following message:

“TDS is deductible @2% if cash withdrawal exceeds Rs.20 lakhs and @5% if it
exceeds Rs.1 Crore as the taxpayer has not complied with requirements of
Section 194N.”

TDS is to be recovered manually by the branches as detailed below and record the
details of the transactions in the register to be maintained at the branch.

Cumulative Cash Withdrawals PAN Rate TDS auto Balance

during F.Y. (from 01.04.2020 available of TDS deducted TDS to be
onwards) by CBS manually
deducted

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 by the
Branch
Cash Withdrawals > ₹ 20 lacs Yes 2% -- 2%
but <= ₹ 1 Crore No 20% -- 20%
Cash Withdrawals in excess of ₹ Yes 5% 2% 3%
1 Crore No 20% 20% --

6. In case of any request from the customer for closure of the account, branches must ensure
recovery of TDS u/s 194N as discussed above, before closing the account.

7. Kindly ensure to comply with the above instructions meticulously.

Yours faithfully,

(Sandeep Ubale)
Chief General Manager (FR&T)
Encl: As above.
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